Gibbes MacHinery Co. v. Niagara Fire Ins. Co. , 119 S.C. 1 ( 1922 )

April 25, 1922. The opinion of the Court was delivered by The appellant sold an automobile to one H.L. Gregory, and took a mortgage on the machine for a part of the purchase money. The mortgage contained an agreement by the mortgagor that he would insure the machine and assign the policy of insurance to the appellant. This mortgage was duly recorded. The policy of insurance noted the fact that the machine was mortgaged to the appellant, but did not make the loss payable to the appellant. The machine was burned, and the adjuster applied to the appellant for information as to the status of the mortgage debt. The company paid the policy to the mortgagor and this suit is brought by the appellant for the proceeds of the policy. The appellant demurred to the complaint. The demurrer was overruled. The defendant moved for a nonsuit. This also was overruled. The plaintiff moved for a direction of a verdict. This was granted. The trial Judge ordered a new trial on the ground that he had made a mistake of law in directing a verdict.

There is evidence that the adjuster knew of the existence of the mortgage itself, and went to the mortgagee to get information in regard to the mortgage, and got it. Even if the company was not required to make inquiry, it did inquire. The bare fact that they came to inquire threw the mortgagee off his guard. Why should the company inquire if it was not for the purpose of complying with the terms of the mortgage? When the company had notice of the mortgage itself, they were chargeable with notice of all the facts that a reasonable inquiry would have revealed. A simple question, "Have you any interest in this insurance policy?" was all that was required. The provision that the mortgaged property should be insured for the benefit of the mortgagee is a very common practice, and the provision to be expected.

In Grandy v. Insurance Co., 52 S.C. 231, 29 S.E. 657 we find:

"Now, it is clear the third proposition is not sound, for it required the agent to have actual knowledge of the actual existence of the other policy; whereas, if the agent had only such information which, if pursued, would have led to actual knowledge of the existence of the other policy that would have been sufficient notice of the other policy."

Here there was actual notice of the mortgage and an inquiry, the only apparent purpose of which was to comply with the terms of the mortgage. The authority above cited is full to the point.

The complaint stated the above facts, and was not demurrable. It was tried as an equity case would have been tried by the Court on a direction of a verdict. The evidence complained of was not prejudicial, in that it did not affect the real issue.

The order granting a new trial is reversed.

MR. CHIEF JUSTICE GARY and MR. JUSTICE WATTS concur.